Dexia board agrees to rescue plan

SimonKennedy

LONDON (MarketWatch) -- Dexia SA
DEXB, -2.81%
said Monday that its board has approved a rescue deal that includes the sale of its Belgian banking division to the Belgian state for 4 billion euros ($5.4 billion) and a 10-year funding guarantee up to a maximum of 90 billion euros. The troubled group said that as of June 30 the sale of its Belgian arm would have reduced its balance sheet by 55 billion euros and its short-term funding requirements by more than 14 billion euros, while resulting in a loss of around 3.8 billion euros. Belgium is providing 60.5% of the state guarantee of new funding, while France will contribute 36.5% and Luxembourg 3%. The funding deal could be extended beyond 10 years if necessary. Dexia said it is also negotiating an agreement with Caisse des Depots et Consignations and La Banque Postale in relation to the financing of local authorities in France and is also in talks over the sale of its business in Luxembourg.

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